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tv   Worldwide Exchange  CNBC  February 9, 2010 4:00am-6:00am EST

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welcome to the show. the headlines today, here in asia, we continue to focus on toyota. the automaker's president apologizes to investors for the drop in market cap as the automaker recalls half a million hybrids, including the prius. >> here in europe, swiss bank announces a more positive
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outlook for the year ahead. >> in the united states, markets look set to rebound after the do dow dropped below 10,000. but investors remain conscious about the impact of europe's debt problems. >> welcome to "worldwide exchange." it's christine tan here in asia. it's 5:00 p.m. in the evening here in singapore. let's get a quick view of where asian markets have closed today, a tuesday. the nikkei 225 continues to remain under pressure, down marginally, 0.2%. toyota continues to be in focus. but this particular stock rebounding today or climbing a little bit because of short covering despite the recalls you're seeing from the automaker. the hang seng is up some 1 much 2%. commodity related stocks are pushing higher because of higher prices. the shanghai composite up 0.5%. over in south korea, this market up 1%, over 1%, bombay sensex
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trading up 0.5%. however, the australian market is up 0.4%. cnbc ftse global 300 index is up marginally, 4,200. ross, good to see you. >> hey, christine, always great to see you. we had a slightly better start than predicted. we were being called down 30 points or so for the markets. down 0.25% fort cac 40. we have banks firmer this morning. autos and basic resources are the sectors driving just a little bit higher. nicole, a very good morning to you. >> and good morning to you, ross. we are looking at markets up across the board right now. the dow is up about 75 above fair value. of course, after closing below 10,000 for the first time in three months yesterday. 9908. s&p and nasdaq futures are above fair value right now, as well, so perhaps markets are looking
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for a rebound today, ross. >> i will take it, nicole. our guest host for the entire hour, we have david roche of independent strategy and a familiar face here on "worldwide exchange." david, always good seeing you. thank you very much for being with us here today. mixed markets once again. the euro zone is really weighing on the sector. can markets really shake this off and move on from here? >> well, yeah, they can possibly shake off greece, which probably has a fairly limited relevance to japan or china. but we have to work out what we're going to move on to. there are several concerns this year. one is, the problem of sovereign debt is not just a problem in greece or spain, it is almost as much of an issue in developed
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countries. governments are absorbing a quarter of global savings. you know, can this really be financed and is this money being well spent? that's one thing. the second thing that we move on to is that central banks cannot possibly print as much money this year as last year. in fact, many of the fed's programs are coming to an end, so we don't have the liquidity. governments spent a large amount of money giving i tell to the consumer. and the same trick, again, cannot be repeated. we're dealing in the laws of derivatives. in order to produce the same optimism as last year, all these things have to happen as for tu tuesdayly as last year. and i think that's going to be difficult. so move on? yes. but move on to difficult things. it's not going to be an easy year. >> so what are you expecting for the markets, more correction, more sell-offs? >> no. we get rallies.
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at some point, through zone is going to have to come in and give greece money in return for a very strict fiscal plan controlled by the eu itself. that's probably what will have to happen. and then we'll have a rally in the assets and euro. but as i say, last year, everything could be based on hope, on government measures and on hope. this year, everything has to be based on those measures producing a sustainable economic recovery, low inflation and yet creating enough liquidity to keep aets prices rising. i don't think that's going to happen at all. the markets will rally, of course, but we'll finish the year lower than where we are now. >> david, this is nicole in the united states. you talk about a year of hope. were investors perhaps hopeful that the greece situation would just go away is in the?
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this is confounding to me. this is a country that has always had a debt crisis. why didn't people see this coming? why are we surprised by this? >> well, you know, nicole, people in the main are not terribly original. they're actually rather like sardines. they liked to go with the show. this time last year, the word looked like it was ended. lo and behold, we have an enormous amount of money printed by fiscal banks and an enormous amount of stimulus provided by governments. the natural reaction is to simply say, whew, things are better. as you rightly point out, greece has spent 50 of the last 75 years in default. so why would people be
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surprised? the debt ratios, the budget deficits of the u.s., of japan, of spain, of italy, .note, i'm redefining the countries with big problems here are the uk. these things didn't happen overnight. they were created over time. but people didn't want to know. and now, unfortunately, when all the governments are trying to borrow far too much money, the weakest governments trying to borrow money find themselves stuck and we're reminded of the realities. that's how it happened. it's just human. >> we like to see no evil, indeed. david roche, global strategist for independent strategy limited. david, do stay with us. in the meantime, let's get some big stories we're following around the world for you today. new york fed president bill dudley says the u.s. financial system is in much better shape, but beyond and medium sized banks are still under pressure pep says banks still face loan losses from commercial real
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estate and mortgage is on consumers, which put a damper on credit for how would households and small businesses. dudley's speech is mostly about the financial crisis and didn't address the mon at all tear policy. a new report from conference ford shows companies are budgeting pay hikes of less than 3% in 2010, which barely tops inflation. the reports out there say this is a concern for the economy because salaries, essentially, translate into consumer spending and people want to spend, but of course, ross, businesses are more and more, we are seeing lately, reluctant to loan. >> it's a continuing theme. shares of ubs today, nicole, are trading to the downside despite the third quarter. net profits of $ billion beat analyst forecasts and lower than
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expected credit charges. but clients withdrew far more money than we had thought, accelerating outflows. the ceo said ubs needs to be profitable in the next quarter, as well, to earn the clients' trust back. >> ross, toyota is recalling nearly half a million worldwide to fix brake properties. the latest in a string of security lapses. it affects not only the top selling hybrid car, but also the lexus hs-250h sedan and asai. toyota says the cost of the latest recall is still unknown, but he's confident about fixing 90% of the vehicles in just three months. meanwhile, toyota's chief north american is set to testify in washington on wednesday. toyota shares, meanwhile, riegz
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3% in tokyo trade today. shares have lost a bit of the value since late january. >> david, what do you make of this for toyota? could they have done anything right? what did they do wrong? >> you know, i'm a little bit mystified, too, and i'm not an automobile analyst. in fact win hardly even own a car my car is so old and bashed. but you know, i think this is one of the effects of globalization. what in my mind has happened is that toyota has become more like other automobile producers. faced with a massive downturn in demand for cars in the last year, what it did was it cut costs and it cut corners and quality control collapsed. and, you know, we've seen that in many other producers around the world. but what is really stunning is
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that something which was so core to the industrial culture of japan, the maintenance of well engineered products with superb quality control at any price, actually became a victim of just trying to reduce unit costs. and i actually think that's what happened, but i don't know that for a fact, of course. but it seems to me extraordinary. >> david, what do you think is going to happen to the toyota brand image? how much damage -- >> oh, no, look, i think what this is going to cause is they're going to return to their roots. and they're going to go back to exactly the same sort of quality control that they had before. both of the design and the implementation stage, christine. i don't think they're going to fail to draw the correct lesson from this experience, because if they don't, they're doomed. >> what car do you drive, david?
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>> i drive a honda, but a thing with little wheels like a skateboard, and it's a box in which you can put kayak equipment, bikes, dogs, etcetera. it's a clever car, but it's just a box with tiny wheels. >> david roche, independent strategies limited, thank you. nicole, over to you. >> let's do a u-turn right now. one of the world's best kept secrets every year has been revealed. brooklyn decker is the cover model for the 2010 sports illustrated issue. a giant billboard was up valid on monday night in times square. decker, by the way, is a five-year vet of the magazine is and is married to andy roddick. the si issue is one of the most
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profitable issue ever. darren rovell, a lot of guys around here think he's a lucky, lucky guy with his special business momd model. inside the si issue, get a sneak peek by heading over to cnbc.com. >> how behind the scenes does he go? >> that is what we call a tease, ross. you're going to have to watch to see. >> i just -- just wondering. >> ross is just simply -- >> how big was that? is that a couple of stories? that's more than that. that poster shot looked quite big. >> careful, ross. >> i'm saying -- >> careful about the adjectives you use. coming up next on "worldwide exchange," we will continue to move on to something a little bit more serious. toyota continues to recall an extra half a million cars. we'll look at how long the dent to its reputation will last.
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we'll be alive in tokyo with more ahead on the program. [ male announcer ] for over 50 years, providing you with safe, reliable, high-quality vehicles has been our first priority. ♪ in recent days, our company hasn't been living up to the standards that you've come to expect from us or that we expect from ourselves. that's why 172,000 toyota and dealership employees are dedicated to making things right we have a fix for our recalls. we stopped production so we could focus on our customers' cars first. and technicians are making repairs. we're working around the clock to ensure we build vehicles of the highest quality... to restore your faith...
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in our company. for more information visit toyota.com.
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16 minutes past 9:00 in london. there was a dusting of snow live
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night. meanwhile, here in europe on the bond markets, bonds opened changed this morning, yields picked up slightly focused very much on the itinerary of the ecb. jean-claude trichet cut his trip short to the summit to attend something on thursday. the 10-year treasury note this morning, well, that yield is ticking a little bit higher during the asian session. the european trade, 3.61%. we've got a $40 billion three-year note action on tuesday. a $25 billion 10-year note tomorrow. that will be the focus for that particular market. christine has the update on the currency market. >> i do, indeed, ross. the dollar is looking stronger against the yen right now. 89.68 or around that level. euro recovering against the dollar, 0.6%. 1.3731. sterling/dollar, 1.5598. euro/sterling, 0.8801.
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nicole. >> and christine, the economic data begin toes pick up in the united states. the national federation of independent business releases its monthly small business optimism index at 7:30 a.m. new york time. at 10:00 a.m., december inventory wholesale numbers are out. the joint economic committee holds a hearing at 10:00 a.m. in job creation measures, provided lawmakers can get to capitol hill today as there are two feet of snow dumped in the washington area this weekend. so they're basically shut down. mcdonald's, meanwhile, releases its january same-store sales figures before the opening bell. sales have been slowing in recent months. coca-cola releases numbers before the opening bell. after the close, we hear from disney. warren buffett and hank paulson will talk about the economy at the omaha chamber of commerce's annual lunch, which starts at about 1:30 p.m. new york time.
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it's an informal chat, no moderator, no questions from the audience, but we'll have some cameras there, ross, so we'll be watching. >> just like a cozy fireside chat kind of thing. nicole, we're currently up 0.5% for the ftse 100. a little less for the xetra dax, 0.25% higher for the cac and swiss markets. what is driving us higher? resources and banks seem to be slightly firmer. why? >> well, looking at the mining stocks, for instance, ross, we had xstrata reporting yesterday, we have billiton reporting tomorrow. what is interesting is xstrata coming out and saying they wouldn't mind potentially merging with the biggest shareholder, glenncore. whether this is likely to happen or not is up in the air at the moment.
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glenncore was talking about potentially floating themselves. i think that's, again, up in the air. but the mining sector seems to be receiving news well and whe'e seeing increased demand for financials today. it looks like we're having a small bounce at the moment, but it could be a small relief rally in a largerer, bearish trend to the downside. so one needs to be wary. it's worthwhile noting that while one of the investment banks came out with a note earlier today stating that there could be a certain amount of exposure for the banks in the sovereign debt area. so we're not entirely clear how much, but it's one we're keeping an eye on. >> i saw the market liked the tenor of the information they heard. >> absolutely.
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they're paying a 6 p dividend in addition, as well. so a positive set of numbers from british land. they've sold assets recently. they've got around about 1 billion pounds in reserve. it could be a while before they go on the acquisition trail. it's a question of watching or waiting to see what they do with this money. but it's an example of how property companies should be run. a lot of the exposure is in london, prime assets in the uk and especially in central london. so they're in a prime position to benefit from any recovery. i wouldn't have a read across from british land to the rest of the property sector, though. manjoi, thanks very much for that. patricia has the latest in frankfurt. what's firmer, patricia? >> it is the banks coming back this morning. however, put it into context of very low volumes, indeed.
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only about 23 million shares has traded at the moment on the upside. the same picture, by the way, for the midcap as well as the tech dax. so deutsche bank is gaining almost 3.2%. m.a.n. this morning being upgraded and reacted to that. on the down side, though, we have utilities lower. then we had interesting earnings coming through, for example, from duke glass. that is a retail chain store for perfumes. that is up, plus an impressive outlook for 2010. >> car gem had figures out today. did the market receive them well? >> well, the numbers came out yesterday after the bell, so the impact is today. and the impact is down 0.32%.
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that stock having had a rally of about 50% over the last 12 months. so from that point of view. but i think what is particularly interesting is what the ceo had to say on "squawk box" about the outlook. we talked to peter schatz earlier on and this is what he had to say. >> we shot through the $1 billion revenue mark and had an outlook for 2010. this is based on a strong supply for the markets. we supply the health care industry, which is extremely resilient and robust. >> let's have a look at the hot board and the way it is trading. up about 17 points, 2% over the last two months. people are late. so perhaps people are selling into the story. the outlook is very confirming, indeed, ross. >> thank you for that. there is a focus on autos in
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france, but it's the japanese unit of nissan, stephane. what are they saying? >> dp raised its forecast for the full year. that's very positive news, of course, for renault, which is the main shareholder of nissan. both french carmakers are due to post earnings later this week. they are both trading higher, renault up 2.6% and peugeot citron both in good shape. the company posted a loss for the last year, but it's due to cost cutting. sales dropped 22% for the last year. the company believes that the upturn in auto production will last until the end of the first half of 2010 and for that, the company believes that it will
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return to profit. that's a statement from the ceo and the stock is trading 3.6% lower on the french market right now. stephane, we'll leave it there. thank you. coming up on "worldwide exchange," nobel laureate joseph stiglitz says the markets are a crazy man. yes, a create man. if that's the case, who can tame them? we'll have more on our strat gets throughout the program. stay tuned because right after the bank, we'll bring you trade data out of britain. how are we going to react to that?
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here are the headlines from around the globe inspect. >> here in asia, toyota continues to refocus. the president apologizes for the drop in market cap as they recall more than half a million vehicles. . >> europe, the markets are disappointed and clients withdraws accelerate. >> in the united states, the markets look set to rebound after the dow dropped below 10,000, but investors remain confident about the impact of europe's debt problems. >> you're watching cnbc's
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"worldwide exchange" with ross westgate, christine tan and nicole lapin. now the ftse cnbc global 300 is up 10 points, as you can see. banks and mining stocks are essentially firmer this morning. we've had a rebound in autos as we heard stephane saying fairly good numbers out of nissan today, so despite all the numbers from toyota and the car companies aren't necessarily being washed out. even toyota had a rebound today. >> it did, indeed, ross. but despite recalls of half a million vehicles, there was an announcement made. this particular market is continuing to weigh on investor sentiment across the region. hang seng up 1.2%. shanghai composite up 0.2%. kospi up 1.1%, bombay sensex up
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0.8% and the aussie markets down 0.36%, so we are mixed. >> and christine, the dow is up about 100 points above fav fair value after closing below 10,000 for the first time in three months yesterday. s&p and nasdaq futures, ross, are above fair value right now, as well, so perhaps looking for a rebound. >> we're about to get trade data out of the uk right now. december global goods trade value, minus 7.2%. december non-eu goods trade balance, minus 3.55 billion. again, a little wider than expected. the global goods trade gap, the widest since january 2009. it is pulling sterling slightly
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lower against the dollar. quick reaction to that with phillip shore from investec. >> yeah. a bit worse than our expectations. what seems to have happened is imports are higher on the month. while function reads too much into trade data, they are very volatile, and perhaps unreliable, as well, it would appear to signify that there's an increase in domestic demand, which is pulling imports through. so a bit disappointing from the numbers point of view. but looking ate it from a big picture point of view, perhaps not too serious. >> sterling was in focus yesterday against the dollar. down just below 1.60 at the moment. we had comments out from mr. stiglitz, markets are crazy, man. the spending cuts won't tame. he's suggesting we shouldn't be working on cutting investments too soon. >> i think most people disagree with that. it's certainly true that if you try and cut the deficit too soon, too quickly, you risk sending the economy back into a
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recession, from which it has to be difficult to emerge. having said that, the longer term fiscal position is unsustainable. you're looking at a doubling of debt service perhaps from $30 billion a year to $60 billion a year on government debt service. >> david roche is still with us. are you with mr. stiglitz? he says even if you give a crazy man what he wants, they will still kill you. suggesting even if you do make cuts early, you won't satisfy them. >> mr. stiglitz is always a very lively and controversial commentator. but his beliefs are founded in kensnian economics, which is if governments spend money, the net result is always good for society. the point of the matter is, it
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is important to realize if governments spend money which they do not possess, they're spending your money and you may react by spending less. so i would completely agree, not with mr. stiglitz, of course, but with my other fellow gust here that, you know, if these governments don't stop spending money we don't have, we are faced not only in greece, but i mean, we could add up 15, 20 countries worldwide including the uk, u.s. and japan which simply have unsustainable levels of deficits and unsustainable levels of sovereign debt. so we're not going to have little old greece which is 2% or 3% of european gdp, which will be in trouble. it will be the big boys that really matter.
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so mr. stiglitz, i much admire him, but i don't believe a word he says. >> japan, large debt. u.s., large debt. euro zone, large debt peripherally. and in the uk, as far as the economies go, they're all ugly, aren't they? should anything be stronger than anything else? >> it's like trying to choose the prettiest hooker in a brothel. the answer is, you know, this is not the right place to start a beauty competition. and what you're looking at in exchange rate markets is, right, the americans have spend so much money, there's a certain amount of people who believe they're going to be first economy to recovery, therefore, the u.s. dollar is stronger and the european central bank won't bail out greece, so the european economy is not going to recovery so the euro is weaker.
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that's the kind of thinking that is going on, but it's not strictly relevant to the long-term. the real problem is sovereign debt, which is using up 25% of global savings, which is far too much. >> yes, phillip, your view on that. also, how important is it mr. trichet has cut short his trip to australia and is coming back home for the eu summit, as we understand it? >> certainly. in the short-term, should the dollar be this strong? well, i think it's important to look at absolute levels, as well. we've been arguing for some time that the euro has been controlly overvalued and our assessment of fair value is somewhere around 1.20. the dollar's rise is probably justified, given that the euro zone has got problems and the u.s., its own budget deficit is hardly anything to crow about.
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on the trichet situation, yes, i think it is important in the sense that i'm sure that the special economic summit is going to discuss what can be done on a pan european level to sort of the greece greek situation, if it needs to be done. it's possible yet that, you know, greece can stumble on and it can sort its problems out. but there has to be a contingency, a backup plan, in case greece's problems are too much for them. >> and phillip, i want to get your thoughts on this new report out showing the largest short position ever against the euro. what is behind that? >> well, our guess is it's a few things, really. number one, it's the budget deficit situation for the number of european nations which are very much in the sights here.
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there is talk, which we work is mismaced, which could put strains in the area and could lead to a country leaving the euro zone or the euro zone breaking up. we don't give that any crete credence at all. but that seems to be why the dollar has made some advances on the euro. and bearing in mind, we think that the euro has been overvalued vis-a-vis the u.s. currency for quite some time. >> phillip, my question to you is we haven't been talking about this. a lot of people have been saying that the probability or the possibility of a sovereign debt crisis is nowhere near what people are saying right now. should we completely rule that out for now? no. it is a risk and i would certainly disagree with what professor stiglitz had to say about budget aert consolidation. at the moment, what we have is a sovereign debt prop problem.
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that can be addressed with well time fiscal action which has to be reduced into the medium term to reduce government borrowing. if that doesn't happen and if the political will falters to sell that budgetary consolidation, then there is a risk of a budgetary crisis and that's when markets would be fully justified in extending the moves which they've made recently. >> phillip, we'll have to leave it there. thank you very much for being with us today. i'm sure you were highly entertained by the quotes given by david roche today. i saw you smile. chief economist from investec. and of course, david roche, our guest host, will continue to stay with us. he's from independent strategy. coming up next on "worldwide exchange," we will head live out to tokyo to hear about the latest on toyota's troubles.
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and welcome back to "worldwide exchange." it is 5:41 in evening in hong kong. as you can see at the harbor, looking pretty cloudy. looks like it's going to rain, actually, on a tuesday evening and it's 25 degrees celsius, i'm told. let's cross live to tokyo with a
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look at the trading day there with nozomu kitadai. >> thank you, christine. the nikkei index fell to 932, its lowest closing level in two months. investors remain cautious about sovereign debt problems in europe and the persistent strength of the yen. buybacks of toyota motor and affiliated stocks in particular provided support to the benchmark index after the auto giant loss more than 0.5% of its share value. shares in koyto industries plunged 33% after the business transport minister issued a. the firm allegedly falsified performance data for its aircraft seats for more than a decade. investors thought only pawn airways on the news fearing that seat repairs could impact the carrier's performance.
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gentleman panel's mcdonald's said it would close slightly more than 10% of all its stores in the years through 2010. the company will book a special loss of about 12 billion yen due to these closures. let's move on to another story we're watching in toyota. toyota is in focus today after issuing a recall of the prius as well as other vehicles. kari, i understand the president of toyota had a meeting with the transport minister and there was a presser after that. you attended the press perpendicular what's the latest? >> i'm here at the tokyo off of tokyo operations. you see behind me akia toyoda that sat behind me.
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this news conference followed the recall that the toyota corporation announced earlier in the day on the prius hybrid and three other model webs which includes the plug-in version of the prius and the lexus version of the hybrid. but here is what he had to say, speaking in english, again, at this news conference. >> we assure the commitment of our lifeline of quality of our company with me taking the lead and keeping to the principal. all of us at toyota have captured the issue with suppliers. together, we can do anything in our power to regain the confidence of our customer peps. >> this is the second time in as little as three business days that the president, mr. toyoda,
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the grandson of the founder met the press, very aware of the criticism that perhaps he and the company have been too slow to respond in a series of recalls that has dodged the company. what remains unanswered tonight is why they have expanded the prius into a full blown recall. just last week, the company said that there was a software glitch in the braking of the prius that felt inefficient. those were the words they used. technically, i spoke to analysts and said if that's the problem, why did they expand that into recall? they were very unclear on that. although this was a very long news conference, but the president did refer to prepared texas when asked these questions. they say they have received more complaints about this inefficiency in breaking which seems to ininterfere on icy and wet surfaces, as well. this is a recall involving close
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to half a million cars and the prius, synonymous with the knowledge that toyota has in hybrid technology and almost synonymous with the prowess of japanese technology. >> kaori, do you get a sense that there will not be any more recalls? >> there are hybrid cars, christine, and they told us today, they assured us that no other hybrid cars are affected in a similar way to this braking glitch. but akio toyoda said he is making plans to visit america. he didn't say whether that would meet with la hood, who has been critical of toyota's responses over the last couple of months. but he says akio toyoda, who studied in the united states and worked for toyota for a long time in toyota says america
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needs to be making a stronger effort to be accepted by america in american society each though they've been doing business there for over 50 years. >> kaori enjoji, thank you very much. it is now evening time in tokyo. let's get some analysis from pellam smithers and staying with us, of course, is our guest host, david roche from independent strategy. can we start with you, pellam? how did things get so bad for toyota? we knew it was one technical problem after another and there was a sense that maybe toyota was late reacting to the problems. do you get a sense of that, as well. >> yes. the problem was somewhat unfortunate for toyota that quite clearly there were two separate but simultaneous issues with the with same auto cart. dow a recall, you fix one part and it goes back out and the same part malfunctions again.
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quite clearly, that was an issue for toyota which they couldn't have anticipated or dealt with in advance. having said that, i think that in the last three or four months, obviously, this problem has been going on since summer of last year. in the last three or four months, toyota's management got behind the curve and allowed the new story to control them rather than control the new story. >> what happens to the trade in premium as we know it? will that disappear? >> this is the big problem toyota will face over the next two to three years. you may well be willing to buy a new toyota car, but the question is, would you buy a used toyota car? what obviously is the worry now is the secondhand car markets for toyota deteriorates significantly. that will affect their leasing business. but also, it's going to affect people's willingness to pay as much for the first hand car,
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knowing that over time the depreciation is going to be far greater than in the past. net result? yes, it looks like rebates are going to be an issue for toyota. we're seeing some as high as $2,000 on one of their pickup trucks out there now. so yes, i think this is going to be a problem. >> pellam, what about the rebates for their competitors? they continue to profit, as you know. >> oh, absolutely. this has been a shot in the arm for ford, who i understand are offering toyota customers $1,000 to switch over to ford right now. the work toyota has to do to fight this is going to be considerable. the issue, though, is that if you go back to 2000 and the ford explorer firestone situation, that was an occurrence where 250 deaths were related to the issue. as far as anybody is a ware, the total number of deaths related to all of the toyota cars is 19.
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so the perspective is considerably less. but that doesn't make it a major story and doesn't give the rivals a big opportunity to take advantage of it. >> and pellaman, david, i want to ask both of you, who do you think is going to benefit most from toyota's problems? pellam, what do you think? >> i think it's going to be nissan. . the company is well into the u.s. market in a way that's, you know, i think toyota right now would like to be in terms of its u.s. image. nissan for a long time sold itself as a u.s. company in america. and i think that, as you can see from their recent results, both the strong sales and the cost cutting, that is a company on the mend and able to take advantage of this. >> david, do you agree? >> yeah. i think certainly in the u.s., it's going to be nissan. in japan, there are other carmakers which will benefit, among them, honda. so i put honda on the list as a beneficiary, as well.
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>> pellam, it's interesting because now they are talking about the lexus hybrid having to be recalled, as well, which goes right up into the food chain. i wonder, because ford has talked about problems with hybrids, as well. does this put a damper on hybrid sales, or not? >> it could. it's going to be very interesting to see how this plays out over the next year. there two issues. firstly, because petrol prices at the pump have risen, the demand for hybrids have held up considerably well. you consider where we were last year and petrol dropping below a pound a gallon is now up to 1 pound 20 on the streets. suddenly, the high before it brid looks quite a good deal. so the business line is in their favor. this, though, may mean that people say to take a look at other companies' hybrids and david was right with, say, honda. >> and what is interesting, there has been a huge shift to
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small petrol and very fuel efficient petrol engines. >> that's been at the expense of diesel. i think hybrid is a separate niche because its green qualifications exceeds those of diesel. so, you know, and with petrol going up, it has worked to a degree. >> all right, pellum, good talking to you. this is an ongoing story. let's check on some of the other asian markets here in asia and see what else is moving the markets. mixed finish, adam. >> not too bad, christine, when you consider we saw a triple digit sell yau in the dow jones and the japanese equity markets took those losses in their stride. let's take a look at the south korean equity markets. the kospi managing to close within a whisker of its intraday high, up by 1.2%. it was the usual suspects
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boosting sentiment within that equity market, particularly coming from the blue chip stocks. and we also saw a strong session after the korea exchange lifted the trading exchange on kumho petro. they did bring to the market some news about their restructuring plan and also the major bankers behind the ninth largest conglomerate said they're pretty much going to stand behind the entire group as they work out their huge massive debt problems. as a result of that, the banking stocks got behind the board. meanwhile, in the greater china region, we saw outperformance in taiwan. that market is one of the best performance after the exports for january surged 75.8%, beating economists expectations and also there had been talks that the national stabilization fund had been in the market.
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remember, many of these markets will be shut, christine, for a public holiday, being the lunar new year holiday. >> and they're closed for a week, i understand. >> that's right. >> let's find out what's happening in india. ayesha faridi joins us live with the indian business report. >> good bit of turn around for the market. it's picked up and significantly, so pretty much staring at the high point of the day. the real sector has been the entire metals universe, so you've got tata steel which has come up with a share ahead of its offer. another pocket, that is the liquid universe which is the mid and small cap indices. so you are seeing a flurry of activity in the entire mid cap. that is on the back of a hypertension injectable, so it is bringing some bit of activity in the midcap farmer space.
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pharma, all these counters are holding up very well. you've got a whole lot of diamond stocks which are looking fairly good. so once the stock was holding up well, yesterday's new listing puts in another after a 30% premium to issue its price in yesterday's trade is holding up very well in trade today. the only weakness that is coming in from the high beat pocket, the unit xcel continues to come in on this one. with that, it's back to you. >> ayesha, thank you very much for that. ayesha faridi, live from mumbai. let's get a final thought now from david roche. what should investors be looking out for? >> well, i think one of the issues that investors should keep a close eye on is the fact that inflation is coming back. now, there are several reasons for that. a simple reason is the fact that
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food prices have risen substantially, particularly for crops and, of course, food out here is a very large part of the consumer price -- the consumer shopping basket and therefore consumer prices. so that is one thing that is going on. but the other reason which is kind of more worrying on a macro side is that part of the revival and inflation is due to the fact that numerous asian economies chose to follow the u.s. dollar when it was very weak. and in doing so, of course, they had to hold their currencies down. and the only way you can hold your currencies down is to print more of it. so that is coming through in terms of inflation. and practically with the exception of three asian economies, we really can see now that inflation is actually rising on a quarter on quarter basis far faster than annual rates, so 5%, 6%, 7%, 8%.
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what that means is that markets are going to have to confront a tightening of monetary policy at the same time as the world may not deliver the sort of growth that they're expecting at the moment. i think that's the challenge for asia. >> all right. we'll continue to watch this inflation thing that you talked about and the impacts on markets. david, it's always a pleasure having you on "worldwide exchange." thank you very much for your time. david roche, independent strategy. nicole. coming up on "worldwide exchange," the dow closes below 10,000 for the first time in three months. is this just a temporary correction? stay with us.
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welcome to "worldwide exchange." in the united states, the market looks set to rebound after the dow dropped below 10,000, but investors remain conscious about the impact of europe's debt problems. >> while here in europe, banks are very much in focus. ubs swings to a profit but it's disappointed as client withdraws accelerate. >> and here in asia, toyota's president apologizes to investors for the drop in market cap as the automakers recalled half a million hybrids, including the prius.
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>> nice to have you with us here on "worldwide exchange." i'm nicole lapin. it's just after 5:00 in the morning on wall street. welcome to the start of your global trading day. let's take a look at how markets are likely to open. we don't have the board that we normally show you, but take a peek at the scroll, the u.s. scroll on your screen. markets are up about 85 above fair value and has been for the last hour or so. the dow closed, as you know, yesterday, below the 10,000 mark for the first time in three months. right now, the s&p and nasdaq futures are above fair value, as well. ross, it looks like a bit of a shot in the arm. >> yeah. and we have some games right now, nicole, here in europe. we're two hours into the trading session. remember, we closed up about 0.6% across most of the markets. the ftse 100, not quite that gain at the moment, but up about
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0.5%. 0.3% higher for the xetra dax. the cac is flat although nissan has helped in the return. banks sxre sours are all slightly firmer, christine. >> equity markets are fairly mixed here in asia. the dollar/yen is trading at the ranges of 39.70. 1.3728. but for how long? stermg/dollar, 1.5582. euro/sterling, 0.8809. so sterling weaker. joining us right now, mark oswalt.
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is he right? >> he is not that far wrong, put i that way. i think what people have failed to realize and one of the reasons we're having this funk or this bounce of worry is that we are shaking effectively the liquidity trade, the central bank liquidity trade and people realize that all that injection of extra cash from central banks, be it the ecb, the fed, boe is coming to an end. and they're wondering actually, now, what they're going to do with all these assets that they've got, given that liquidity is no longer going to be pumped in. and whether valuations are correct given the back drop in terms of economic data that we have particularly in the g-7 rather than in asia or latin america is not great. it basically shows that we're probably stabilizing at low levels in the major economies. but there's not really a sign of
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enormous amounts of -- >> i wonder, in the sense for market players last year was quite an easy recovery trade, wasn't it? >> yeah. >> you could sell the dollar and put identity risk assets. we're re-engineering at the moment. and currency plays have decided that the euro, because of debt worries in greece, we've seen spreads blow out on debt. as a result, uk debt is getting caught up in that trade, as well. but i wonder whether we've pushed too far on that and whether actually -- you know, when you look at the net short positions on the euro, you're saying, that's a trade that maybe has gone too far? >> i think actually in side terms, the net short position in the euro isn't big by historical standards. if we go back to the late 90s when the euro was under a lot of pressure, the short pog was much, much larger than that. so i wouldn't want to get overexcited. i think we're picking on europe, particularly on the so-called prifrry in europe and talking about their debt problems and
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we're ignoring the fact that the debt problems elsewhere are just as bad. >> we've had three guests on in the last 24 hours who said they're coming in this week and buying greek debt. does that make sense to you? >> that makes good sense to me. greek debt basically has a lot of the risks priced in. so this portuguese debt. whereas we probably don't have the risks priced in in the u.s., in the uk and certainly not in japan. and i think that's what people need to wake up to. >> mark, this is nicole lapin in the united states. how do you actually price that, then? >> how do you price it? well, in terms of where we have spreads, it's going to be a case of do you think that current spreads over the u.s. over germany are appropriate? the curve needs to be a lot steeper. and if you look at the municipal
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spreads, they need to widen quite a lot from here. actually, the problems that we're talking about when we focus on the u.s. budget are not just -- just about the federal budget. it's also state budgets as in california and municipal budgets, which most of the small municipalities are shortly overstretched. so i think those yield curves need to ride. >> it's said this is a possible risk. what's your view? >> it's a possible risk, yes, without any doubt. i think the sovereign debt crisis is something we do need to focus on because essentially, where we got into all this mess is by ballooning credit in the
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private sector. but all we've done is replace that with ballooning public deficits, so we're not addressing the problem at all. >> mark, you're sticking with us, marc oswalt. >> and plenty more to come from the i'd, as well. new york fed pd president bull dudley says the u.s. financial system is in much better shape, but small and medium sized banks are still under pressure. he says banks still face loan losses from commercial real estate and consumer mortgages, which will put a damper on credit for households and small businesses. dudley's speech was mostly about the financial crisis and didn't address the economy or monetary policy. salaries for u.s. workers may struggle to keep up with the cost of living increases this year. a new report from the conference board shows companies are budgeting pay hikes of less than 3% in 2010, which barely tops
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inflation. the reports's author says this is concern for the economy because salaries translate, essentially, into consumer spending. people want to spend, but businesses are more and more reluctant to pay more. and electronic arts hits the reset button on its fiscal outlook reporting that results will miss analyst forecasts. this comes a month after the video gamemaker updated its current expectations. investors were frustrated with the company's ability to meet its guidance. in frankfurt right now, ea is down about 9%. christine. >> nicole, toyota is recalling half a million vehicles worldwide to fix brakes problems. the recall affects not only the
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world's top selling hybrid car, but two other toyota hybrids, as well, namely the lexus hs-250h sedan and the sii. the cost of the latest recall is still unknown, but the president is confident about fixing 90% of the vehicles in just three months. meanwhile, toyota's north american chief is expected to testify in front of congress on wednesday. and checking toyota shares, managing to rise 3% in tokyo today. shares have lost nearly 0.5% of their value since late january. nissan has said toyota's focus has led it to focus on consumer trust. it reported an separating prot of $1.5 billion for the october-december quarter, beating estimates. the world's number three carmaker raised its annual
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forecast for the second time. this comes as incentives help rev up shares in china. 2.4% in the positive, as you can see, 731 japanese yen. >> christine, still more to come. our next guest thinks that the volcker rule is not poorly thought out. not only that, it threatens global agreements on bank regulation. more after the break. we want to hear from you, as well. do you think the volcker rule is a good idea? e-mail us.
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on cnbc.com now, news that jean-claude trichet is cutting his australia trip early to attend a special eu summit. an investor told cnbc he is buying greek government bonds as he sees fronts in germany guaranteeing short-term debt from portugal, ireland, greece and spain. billionaire warren buffett is down to luck, not skill, adding that george soros is more
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skillful in his vemts. toyota's stock remains attractive to long-term investors. read nor at cnbc.com. >> welcome back to cnbc's "worldwide exchange." just getting reports out. the ft is reporting that hector sants is quitting the uk financial services authority. but it will be interesting, whatever happens, because at the moment, the ceo is testifying in front of the treasury select committee. the hearing started in the last hour and it's focused on the idea of is too big to fail is the right case and what kind of regulation to we need on that? let's hear what he has to say.
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>> what i'm looking for is insight from your board bearing in mind the assumption of the additional obligations upon you. you must have started to think about that. i'd be amazed if you haven't. >> we have given it a lot of thought, as you can imagine. one of the reasons why i made the comment i did a couple minutes ago about the cost of credit is that we shouldn't make the assumption that those who supply capital to the banks, i'm talking particularly about equity call the capital, are prepared to volume rate circumstances in which returns are below the cost of capital. and you could envision circumstances in which that might become true if the regulatory burden is too high. now, i say that not because i'm in denial about the need for change. i'm clear about that. but i think that one very important point is unless governments are prepared to buy capital for the banks, and they are not, clearly, then institutions must and will and we've got the make returns on
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the capital banking system attractive so that those suppliers of capital will be there in the future. i think the real economy, the asset tests, of course, are are banks reliably undertaking their core functions? i see those as payments. i see those as safe storage for deposits and i see that particularly asthma temperaturety transformation stens of credit. >>. >> let's get more on this. peter, it seems to me, actually, when you look at this market weakness we got, market weakness started with the announcement of the volcker plan. that was the first time we had uncertainty, sort of put into investors' minds. and this idea about too big to fail, it's great talking about it. i don't see anything here that
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caused the banking crisis in the first place. >> i think there is a big problem when you have banks. it's not a question, really, of size. it's a question of who bears the costs of rescuing a financial institution? and the bigger the financial institution, the less likely it's going to be allowed to fail, it's going to be possible for that bank to fail. and then the more the costs are levied on to the taxpayer. that is the source of the moral hazard problem that we have in which we have done nothing to address since the crisis sparked off a year or two ago. >> so look, does a gloernl bank
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tax work or doesn't work? >> i don't think it makes any difference pup couldn't be sure that it would make the path any less likely to need to be rescued. the volcker plan would not have dealt with aig, washington mutual or northern rock. so it's a bit of a side show. i think it's an element of the debate, but it doesn't get at the fundamental point, which is really what do you have to do to make sure that when these banks fail, and we know there will be banks that fail again in the future, that the taxpayers don't have to bear the costs. >> is it the side show, though, that is the beginning of this cause of market anxiety? because it's created a sense of uncertainty. it has injected a sense of uncertainty. there are a whole lot of other fears, the fears about budget deficits that we've got. and so it was a trigger rather than -- which was natural
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because people felt the need to start worrying about, well, if we are going to restrict proprietary trading, where actually are we going to go from here and are markets overall going to be less liquid as a result? but it is a side show. it's all about how much credit can we generate and how much can we borrow against future earnings? >> well, sorting out trading is nebulous, at best. i want to bring peter back in. the volcker plan only applies to the united states. does that mean we'll see a my grait gragz abroad? >> one of the ig issues is the fact that it's only in the u.s. i think the broader issue here is the americans are talking about legislating and prop trading from investment banking which raises all these questions about what is prop trading, how do you define it, and how do you
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prevent people from moving their prop trading out of the u.s.? but i think there is aed broer point here. the regulators are quite keen to try and retain some sort of global cord nation in regulation and to avoid these situations like the u.s. where the u.s. goes off and does its own thing. what they're saying is, look, we can deal with a lot of this through the regulatory infrastructure that we have in place at the moment. we have a proposal going through the basul committee at the moment, which will increase the capital charges for banks. you could easily be saying, we'll just increase massively the capital charge for any proprietary trading that a bank does on its own balance sheet. that will have an effect of making its uneconomic. so you've achieved the same outcome without having to go through a legislative process. >> an interesting idea. a lot mover to come, peter thal larsen. peter, thank you for being with us. marc oswalt, strategist at
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monument securities, please stay with us while we continue through "worldwide exchange." we have much more to come the the dow has closed below 10,000 for the first time since november. does that spell the end of a rally? we'll discuss with our strategis strategists, right after the break.
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welcome back to "worldwide exchange." you're looking at a live picture from washington, d.c. the federal government is actually closed today. yes, closed as they continue to dig out from a major snowstorm. another storm expected to sweep up the east coast and could impact washington and new york tomorrow. ross, it actually costs the federal government $100 million when they shut down. >> that looks like the national airport, doesn't it? there's quite a bit of traffic going around there. >> people are up early. they're watching, they want to race to get to their tvs to watch "worldwide exchange." >> exactly. right, nicole, let's show you where we are with the stock markets. we're firmer here in europe. up 0.5% for the ftse 100. banks and resource stocks are
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having the best. up 0.4% for the xetra dax. british land is doing quite well today in london. and in frankfurt, kayogen is very much in focus. >> unfortunately, ross, the stocks of kyarton did not make the most of the numbers. cryogen is down and absolutely right, the same story here in germany, it is the financials, the banks that are pulling us up at the moment. on the downside, still, s&p and some of the more defensive stocks such as the utilities and fresenius. interesting news hitting the wires about 15 minutes ago, 25 pins ago, actually, with regards to gm and restructuring here in opel europe, confirming that they have to less about 8,300 workers go. a lot of them out here in
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germany, as well. most of them are manufacturing, some of them also in sales and administration. but i think the most interesting part of the story is they need about 3.3 billion euros to maintain operations and they plan to break even next year and be in profit by 2012. over to stephane. >> and in paris, patricia, all the banks are now trading higher, including bnp paribas after the bank received a green light to buy a pension. it's the life insurance you need for adexia. that, of course, very positive news for bnp paribas. societe generale in the car sector, all the cars are in good shape especially on back of the announcement for the full year guidance. renault is in good shape two days ahead of its full year
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earnings. peugeot sit crone is trading higher on the markets today. >> thank you very much, stephane. the automakers continue to be the focal point of the market activity here today on the back of the toyota recall that has expanded now to the prius and some of the other hybrid models. the stock, though, did manage to gain ground after it got battered over the last two weeks. nissan, stephane was talking about them in paris just a moment ago and the results were fairly good. they're swinging to an operating profit and hiking its full year forecast for the second time since november, quite aggressively, way past its earlier forecast and beating the numbers from thompson reuters forecast. in terms of other earnings out there, we had a negative picture for pioneer and japan tobacco, japan tobacco being the third largest tobacco company in the
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world. its net profits and operating profits all plunging to about 10 plus percent, christine. and, of course, japan tobacco owns gallagher group of the uk. so it's one of the biggest tobacco companies in the world. so not too great, i'm afraid. >> coming up next on "worldwide exchange," we head live to tokyo where carry enjoy gee will join us for the latest. >> now it involves the prius and the story is turning political as the japanese transportation minister gets set to meet with the u.s. ambassador to japan on wednesday. more details, coming up.
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welcome to "worldwide exchange." the headlines making news today, in the united states, markets look set to rebound after the dow drops below 10,000. investors remain cautious about
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the impact of europe's debt problems. >> in europe, banks are in focus. ubs swings to a proovt, but disappoints the markets as client withdraws accelerate. and here in asia, toyota's japan transport minister has asked the president of toyota to explain the recall in the u.s. >> nice to have you with us here on "worldwide exchange." we're having a little bit of problem on the data with the boards we normally show you. take a peek at the scroll, but the numbers, markets are up across the board. the dow is up about 80 above fair value right now and has been for the last couple of hours. the dow closed yesterday at 9908, the first close below 10,000 in thee years. s&p futures run about 10 above fair value and the nasdaq up about 14. so ross, it looks like a bit of a turn around in the wee hours of the morning here in the united states.
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>> and it hasn't affected us, either, that dow close. european markets up a percent and more yesterday. right now, we're near the session highs and just under 0.5% for the xetra dax, cac and smi slightly less. good numbers out from the commercial british land, as well, in the uk and ubs returning to the black, which is fairly positive. christine, how with we doing today in asia? >> well, as for the equity markets, they were mixed. the currency markets, dollar recovering against the yen. euro recovering and rebounding against the dollar right now. 1.3725. australian -- dollar, 1.5571. so that is the picture in the currency markets. here in asia, we continue to focus on toyota, the world's largest carmaker is in focus today once again after announcing a global recall of its best selling prius as well as other hybrid models.
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let's get the very latest from cnbc's kaori enjoji. kaori, how does this recall differ from the other recalls? >> this is different in many ways. we're talking about the prius. this is really the jewel in the crown of toyota's lineup. this is the top selling car, hybrid car in the world. this is the top selling car in japan in all of 2009 and it is synonymous with the technology that has made toyota so famous all around the world. as far as the technicalities of the recall are concerned, it's a little bit different because they have been talking about the potential software glitch confirming it last week, taking there was an inefficient braking sensation when some customers are driving the prius. why they expanded it into a full recall, there was a lot to be answered at this close to
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two-hour press conference that was held in the building mind me. a can i o toyoda said through this conference where they brought in a recall. the analysts i speak to say under normal circumstances, this may not have led to a control. but there is a provision in the regulations of various countries that said that a company must conduct a recall if it endangers the secure, safe feeling of the consumer. so this is a bit of a gray zone still. so this is different in that the cars themselves, we're talking about 400,000 cars, much, much smaller in scale than the previous recalls, and we're talking about 8 million so far. >> you know, can i aori, clearly, toyota is trying to make up for long time whin what must have been a pr misstep. is this going to work?
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>> mr. akio toyoda, he said at the news conference today, that they are making plans for him to visit america, where he studied, where he spend years working as a toyota executive. here is what he had to say. >> translator: about my trip to the u.s., yes, we have a plan to go to america. right now in the u.s., all toyota employees, dealers and suppliers are together working very hard to make the situation better. i would like to go to america to encourage and thank them and i would like to explain in my own words to everyone related in the matter. therefore, yes, there is a plan to go to the u.s. >> right now, the japanese transportation minister is hold ago news conference, and there are reports that he is going to be visiting with the u.s. ambassador based as of wednesday. increase teen, back to you. >> carrie an joe ji, our
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correspondent. so toyota is indeed headed to the ooudz to the issue. >> and we are watching from the united states. let's talk right now to hugh johnson. and marc oswalt continues to stay with us. he's a strategist at monument securities. are you still bullish with the market below 10,000? >> yeah. i'm pullish, but i'm a halged bull and i'm challenged because i've watched the performance of the markets not just for the last day or two, but really, since the beginning of the year. and it's obviously shifting towards defense. you don't like to see that. and what really bothers me is that it's shift can towards defense for fairly sound
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reasons. so al of it adds up to say, although i remain bullish, believe me, i'm chaled. >> and what are you expecting to hear from bernanke on capitol hill tomorrow? you say restraint is needed. why and when? >> well, you know, the reason i think that restraint is needed is because i think that he may be getting a little bit behind the curve. the reason i say that is a lot of the so-called leading indicators of inflation, my work, suggested inflation in 2010 is going to be higher than the consensus expectation. so the consensus expects inflation to be around 2%. i think it could be over 3% in 2010. and i think bernanke needs to start move towards restraint, in other words, start to move towards some of the excess liquidity driving this inflation. so i think sooner as opposed to later. i actually think that if he starts to move towards restraint wibt might lead to an increase in bank lending, which is sorely
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acting. but nevertheless, i think he needs to move towards restraint sooner than the consensus believes, not later. >> that's what i wanted to ask you about. we're getting comments in from the fed's bill dudley who says small banks are fuelling the pressure right now. you also sit on the board, i know wbl of a new york company that gives out loans. so is the problem with demand or is it purely a liquidity problem? >> well, you know, i think you have to separate out small banks from large banks. and when you look at small banks, which is what i'm sort of involved in, loan demand is coming from small to mid sized businesseses were very strong. secondly, the response by small lending institutions, which means community banks, has been very inappropriate. in other words, they're doing a lot of loans. but when you look at the overall figures in the u.s., you see they're buying treasuries. you see the growth rate of loans and leases is actually negative or declining.
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in other words, overall loans are really weakening. and i think that is largely the larger financial institutions or banks. they're preferring to buy treasuries, take no risk as opposed to increase their loan portfolios and what's really the probably the principal reason for that, which makes all the sense in the world, is the fact that they've been such a bad experience with their loan portfolios. nerds, their increasing in delinquencies, loan losses and additions to reserve. so the real missing pieces is by lending by large institutions. not small. >> let's bring mark in here. is hugh right? should the fed work towards restraint and will that help bank lending? >> i think it might encourage a bit more bank lending. if the banks are discouraging from playing the curve because the curve is being flattened out by the tightening movement, yes, it might encourage them. but really, i don't think a lot
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of big banks are going to start lending again. so i think the fed actually does really need to wake up to the fact that inflation, it's more likely to be above the average over the past 10 to 20 years, which actually, for everyone that needs to bear in mind it's about 2.7%, 2.8%. so people are expecting only 2% for this year are really underclubing their inflation forecastses. >> hugh, this is christine. given the uncertainty, on a day like this, wa do you do with your money? >> you know, i'd like to see this correction play itself out. i'd like to say, you know, the right thing to do, given the fact that i think the bull market is still fine, it's only a correction in the context of a bull market, you should probably buy on weakness. i'm not sure i have the courage to do that. so what i'd really like to see is i'd like to see the markets play, the correction play itself out. i'd like to watch closely the underlying fundamentals. i'm very concerned, as you may
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know, about the money supply. the growth of the money supply has decelerated significantly. it's very hard to make the case for a recovery -- a meaningful recovery in the economy and earnings when we've seen such deceleration in the money supply. so i want to see this play out. but believe me, i think this is going to be an opportunity. >> if we've got deceleration in the money supply, why have we got an inflation problem? >> well, it's a short-term problem and maybe we don't have that problem. in other words, it's a leading indicator of inflation and i think you have to look a lot further out. the second thing is, on the inflation side of things, what's really driving the higher outlook for inflation is probably commodity prices more than anything. if you take a look at things like import prices excludeing fuel, another tea leaf, the percentage of purchasing managers paying higher prices, all of these tea leaves say that it's going to be largely
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commodity driven inflation. higher inflation, but commodity driven. >> we'll talk more about inflation and commodities after the break. hugh johnson, chairman and cio of johnson illington advisers please stay with us. marc oswalt, stay with us, as well. still to come on was, it is that time of year again, ross. "sports illustrated"'s most highly anticipated issue is out. we'll take a look at who made the cover after the break. [ male announcer ] for over 50 years, providing you with safe, reliable, high-quality vehicles has been our first priority. ♪ in recent days, our company hasn't been living up
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welcome to cnbc's "worldwide exchange." here are some of the top stories we're watching from all around the world for you today. the federal judge who threw out bank of america's settlement with the s.e.c. over the merrill takeover is now questioning the revised deal. he's asking the s.e.c. why it didn't accuse b of a of firing its general counsel in late '08 after he wanted to disclose merrill's widening losses. last week, new york's attorney general, andrew cuomo sued b of a of that issue. the judge is expected to rule on the new settlement deal next week. google wants to socialize. reports say the search giant will announce this week that it's adding social network
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features to g-mail, specifically status updates. google has trailed behind facebook and twitter in this social network arena, although it has a popular service in brazil. in frankfurt, google's shares are down slightly. let's take a u-turn to a very, very different topic right now. one of the world's best kept secrets every year has been revealed. brooklyn decker is the cover model for the 2010 sports illustrated issue. a giant billboard was unveiled on monday night in times square on david letterman's late night talk show. decker is a five-year vet of the magazine and is married to pro tennis superstar andy roddick. the si swit swimsuit issue is the most profitable single issue magazine. cnbc's darren rovell goes inside
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the special model. you can get a sneak peek. ross, i know you've already done this several times on cnbc.com. >> no dwidea what you're talkin about. not interested. >> i believe you. >> yeah, anyway, good luck to darren. that's what i said. the inside story with darren, so we'll need to buy him a beer later. final thoughts from marc oswalt, strategist. we've got a $25 billion ten-year note tomorrow. any concerns about that, or not? >> not really. the three-year should go fine. the 10 and the 30-year i think we may have problems with just because of the yield levels that we're at. and because there is signs of dwindling demand from the foreign so it will be interesting to watch whether we're at 356, 357, there there's
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a dire for ten-year paper at that level or whether we feed to build a bigger concession in. i think if we got to 37 a, 380, then we probably would have a better sale. i think those two factors -- >> risk aversion is helping the dollar out. is that going to help treasuries? >> only really at the short -- >> i mean, it all goes into short end paper. >> it should help the short end rather than the longer end. >> just on this point, picking up this point that hugh was making about inflation, decelerating money supply, the inflation we get will be commodity inflation. how will oed countries sxond to commodity inflation that's coming from growth in emerging markets? >> that's precisely the big network we have. we're not in control of that inflation because it's not to do with our demand, it's to do with the developing world.
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>> we shouldn't react to it because it would be a dampener on growth. it's not a good situation that we find ourselves in. >> on that cheery note, marc, we'll leave it. thanks for joining us, mark oswa oswalt. we have earnings previews here in a few moments. this is not more benefits at greater cost to your company insurance. this is not how does it fit in my company's budget insurance. this is help protect and care for your employees at no cost to your company insurance. with aflac, your employees pay only for the coverage they want or need. and, the cost to you - nothing at all.
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nine minutes to go until "squawk box." becky is with us to tell us what's up. >> we've got breaking news, headliners that you need to pay attention to. coca-cola is about to roll out its quarterly results and mcdonald's is about to serve up quarterly sales. coke coming up at 7:00 a.m. eastern time. mcdonald's is at 8:00 a.m. eastern time. we will get those numbers to you right when they hit. plus, washington is still digging out of that blid blizzard. the government is taking another
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snow day. senator charles grassley, he will be digging into the jobs bill. in fact, we heard he had to sleep in his office to make sure that he would be there for this today. so we're going to check out his hair, as well. greetings from the garden state. jon corzine will get a chance to sound off on job creation, the bank tax plan and the volcker rule. we've got all that, plus byron weed, he'll be our guest host. he is always full of surprises and predictions for the market. ross, we'll see you coming up at the top of the hour. >> looking forward to it. thanks, becky. >> joining us live again to talk about the trading day on wall street, hugh johnson, of johnson illington advisers, we're starting to pick up a little bit, hugh, with the data this week. both consumers staples outperformed in the broader
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market yesterday. what do you expect from consumer sentiment on friday this week? >> well, i've got my fingers crossed. the you hope that consumer sentiment will go up. but the most important component of the report is down in the report, consumer expectations. and the reason i say that is because consumer expectations is a component of the index of leading economic indicators, tells us where we're going, not where we've been. tells us about where consumer spending might be going. so that was about the 70 level in the last report, the december report, january report, and you hope that this report shows an increase which would be an important leading indicator of consumer spending in the economy. keep your fingers crossed on that one. that's important. >> asking you quickly about the largest short position ever against the euro, that has been reported. where are people going to safety? where do you look to hedge against the euro concerns? >> well, i'm not sure what the
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question is. but as far as hedging right now on the markets, what we're doing is trying to buy the basic materials and cyclical stocks and hedging with utilities and health care. but i'm not sure that gets right at your we know. what is your question again? >> where are you going to safety these days? where do you hedge against a correction in the market? >> yeah. i think the answer that i gave is probably pretty close to correct. i think the sectors that are going to perform the best in a correction are the ones that have been performing well, which are the safe sectors like consumer staples, health care and utilities. those are the ones that have been performing well and those are the ones that you buy in a correction. timing these corrections is extremely difficult. you might get into those sectors, but when you enter those sectors and get back into the bull market, which is where you should be, that timing is very, very difficult. hugh, do you worry about the
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exposure u.s. banks so those in greece and portugal? >> yeah, i worry about that a lot. i think there's some movement of fraud to try to help greece, help spain, help portugal, if necessary from the european unions. i'm worried less about it today than when the news broke ar week or two weeks ago, but i'm very concerned about the major international banks. and the reason i'm worried is because that's the missing piece in the equation for the u.s. we don't have money lending or bank growth. if they have problems in their portfolios, obviously, that's going to deter them. that's the missing piece in this whole equation and the one that causes me so much prep addition or so much concern. >> hugh johnson, we pressure
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time this morning. we are looking at dow futures up about 75 before fair value right now. and we will see if they turn around after the 10,000 mark was broken yet. i'm me coal lapin in the united states. >> i'm ross westgate in europe. >> and here in asia, i'm christine tan. thanks for your company here on "worldwide exchange."
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